I'll go in more detail here.
Hardened Mode is designed to make protection tougher without interfering with the computer usage much.
avast! by default checks suspicious files with DeepScreen within virtual environment to see how they behave. But if you use Hardened Mode, it starts to behave a bit differently.
Hardened Mode: Moderate
Under normal conditions, if avast! decides that some file is too suspicious by various characteristics, it then throws it into the DeepScren for further scanning. But if Moderate Hardened Mode is enabled, avast! automatically blocks files that are detected as suspicious by preliminary analysis.
In most cases DeepScreen checks the file and if it doesn't find obvious malicious problems with it, those files are started automatically after analysis. But Hardened Mode (Moderate) blocks it right there.
Hardened Mode: Aggressive
This mode behaves a bit differently. It actually relies on analysis on a very small scale and mostly relies on a huge whitelist database located in avast! Cloud. If file is located within the cloud and flagged as safe, it will allow to run it. If it's not found or marked as bad, it will block it. So, at least based on my experience, Aggressive Mode is actually much more secure and also a lot less intrusive. Only time that it will cause problems is with some very rare old software or very very new software that isn't used by thousands of users. Usually some very specialized programs used by only few users.
Moderate mode often feels a bit too paranoid (despite its name) because it often blocks safe programs just because they exhibit local suspicious file characteristics that are basically ignored by the Aggressive mode.
Only thing that confuses me is why Moderate mode doesn't rely on the same whitelist to avoid these suspicious blockings. In my case, i prefer to use Aggresssive mode and i have done so on many systems and it worked like charm. No problems, no excessive blocking but with superior protection.